Category: Politics

Fast-food economics in Massachusetts: Higher minimum wage leads to a shorter work week, not fewer people on welfare

by philg

One reason for a $15/hour minimum wage cited by advocates is that current minimum wage workers are generally on welfare (public housing and Medicaid if not also food stamps, etc.) and therefore, the theory goes, the employer is being subsidized by taxpayers.

(How a $15/hour job would lift a household above the welfare thresholds is unclear; in our corner of Massachusetts, a family of four is entitled to housing and/or health insurance subsidies up to $130,000/year. At $15/hour, that’s 167 hours/week, 52 weeks/year.)

I recently talked to the owner of 12 fast-food outlets here in Massachusetts. He is a Democrat and enthusiastically supports the party’s proposals for increasing the number of migrants to the U.S. “Immigrants work harder than Americans,” he said, “who have been on welfare for multiple generations and don’t have a culture of work.” He also appreciates immigrants as customers.

There is one part of the Democrat platform that he does not agree with: the $15/hour minimum wage. “Every time wages go up,” he said, “my employees ask to work fewer hours so that they don’t lose MassHealth [Medicaid].” On his side, he does not want anyone working more than 30 hours per week, the threshold that would trigger a requirement for him to provide health insurance under Obamacare. Out of 160 workers total, he provides health insurance to only 10. “My premiums are sky-high,” he noted, “because we have so few people on the policy.”

(This may show the irrelevance of Econ 101 principles in a half-planned economy like the U.S. Econ 101 says that the higher wage would induce workers to supply more labor hours, not fewer. But Econ 101 never met MassHealth and other means-tested programs!)

Related:

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49 percent of Washington State voters see themselves as victims

by philg

Yesterday’s post regarding Kshama Sawant, the immigrant running for reelection on a platform of “the rent is too damn high,” motivated me to check the election results. Ms. Sawant was the only incumbent to have lost. More interestingly, 48.7 percent of Washington State voters say “yes” to reinstating affirmative action:

I-1000, the measure passed by lawmakers, aims to increase diversity in public contracting, employment and education, while barring the use of quotas or preferential treatment.

Affirmative-action supporters say such measures are necessary to address longstanding and broad discrimination against women and people of color. One example they cite is data showing a drop in contracts with the state for certified women- and minority-owned businesses.

But throughout the campaign, opponents of affirmative action — led by a group of Chinese immigrants — said the policy gives the government the power to discriminate.

If we assume that people vote their self-interest, then we can conclude from the election result that nearly half of the voters in Washington State expected to benefit from official victim status.

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U.S. southern border versus Syrian northern border

by philg

Facebook is alive with outrage regarding Donald Trump’s scaling back of our military involvement what will soon be the 9th year of the Syrian Civil War.

The same people who demanded the abolition of ICE and the pulling back of armed U.S. forces patrolling the U.S. southern border are demanding that armed U.S. forces patrol the Syrian northern border. The people who advocate for a wave of migration from Central America into the U.S. are opposed to a wave of re-migration of Syrians currently in Turkey back across the northern border into their original home (map from the BBC, which says “Turkey launched the offensive in northern Syria a week ago to push back from its border members of a Syrian Kurdish militia called the People’s Protection Units (YPG) and create a ‘safe zone’ along the Syrian side of the border, where up to two million Syrian refugees can be resettled.”

Readers: Is Trump wrong? Should we spend the next 10-20 years patrolling the Syrian border and trying to keep our NATO ally Turkey (population 80 million) from doing what it deems prudent in its immediate neighborhood?

[If Elizabeth Warren prevails in 2020, will she solve both of these problems by relocating U.S. Border Patrol forces over to northern Syria?]

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Academics and NYT stirring up envy

by philg

“How to Tax Our Way Back to Justice: It is absurd that the working class is now paying higher tax rates than the richest people in America.” (NYT) is kind of fascinating for what it says about our media and taxpayer-funded universities.

Emmanuel Saez and Gabriel Zucman, economists at UC Berkeley, figured out that the “bottom 50%” of Americans earn $18,500/year on average and pay a tax rate of 25 percent.

Here’s my comment on the piece:

I wonder if these guys ever leave their offices on campus.

If they were to walk down to one of the less genteel neighborhoods in their fair city of Berkeley they would discover folks who are living in taxpayer-funded housing, signed up for taxpayer-funded health insurance (Medicaid), receiving taxpayer-funded food stamps, and using a taxpayer-funded smartphone.

Unless you’re going to turn all of these noncash welfare programs into some kind of cash income equivalent, there is no meaningful way to calculate the tax rate paid for an American on welfare. Given that 71 million of us are on Medicaid, for example, the numbers presented in this article cannot possibly be correct. The economists have the “bottom 50%” with an average annual income of $18,500. The income limit for welfare in the writers’ native Bay Area is at least $117,400/year (see https://www.mercurynews.com/2018/06/25/the-eye-popping-definition-of-what-is-low-income-in-the-bay-area-increases-again/ ).

Maybe they found some people with a cash income of $18,500, but that isn’t their spending power. If it were, these folks could not afford to live in the U.S. at all (since, if they have a kid or two, health insurance would consume 100% of their income, leaving nothing for food or shelter).

The truly amazing thing here is that middle class Californians are being taxed to fund these two professors!

The article has a lot of information about how the rich are getting richer.

Since it is obviously absurd to talk about the tax rate paid by people who are mostly living on welfare, what could the purpose of the article be other than to sow discord and rage? (the authors hint that they have been advising Elizabeth Warren and presumably would be on track for central planning jobs if she were to be elected)

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Programs to raise female wages will secure a voting majority for Democrats?

by philg

Democrats advocate more low-skill immigration. This makes sense politically since roughly 80 percent of Americans on welfare will vote for Democrats (stats at end of this article; 88 percent of folks who benefit from public housing are loyal Democrats, for example). With 10-year waiting lists for public housing, though, it is unclear that low-skill migrants are a sustainable resource for the Democrats.

How about women? The Economist: “unmarried women are spectacularly loyal to the Democrats … The ‘marriage gap’ dwarfs the sex gap, by which women as a whole have long favoured Democrats.”

Is there a way that Democrats could increase the percentage of unmarried women and thereby secure permanent control of the U.S. political system? In general, it does not make sense for women to marry men who earn less than they do. So for every additional dollar that women earn relative to men, support for Democrats becomes more secure.

[See “Mismatches in the Marriage Market”, which notes a “shortage of economically attractive partners for unmarried women to marry” (if the economists who wrote this wanted a one-line summary, they might have said “Men see women as sex objects; women see men as success objects.”); see Real World Divorce for the ruinous exposure to alimony and child support lawsuits that a woman incurs by marrying a lower-income man (or having a child with one; see Sarah Palin’s daughter sued for child support by a Marine Corps veteran); see “Burning Man: Attitudes toward marriage and children” for a finance executive saying “I worked my ass off for 17 years for what I have. I am not going to risk losing it,” regarding the idea of marrying a man who earned less than her (way above average) salary. “Men from poor backgrounds ‘twice as likely to be single'” (BBC).]

Consider Melinda Gates, a supporter of Hillary Clinton and the Clinton Foundation (side question: are foreign governments still donating to this foundation now that Hillary Clinton is out of power?). She explains “Here’s Why I’m Committing $1 Billion to Promote Gender Equality”:

I am committing $1 billion to expanding women’s power and influence in the United States. I want to see more women in the position to make decisions, control resources, and shape policies and perspectives.

Previously, in Harvard Business Review, Melinda Gates “We still aren’t earning as much” and “a stubborn 20% gap persists between men’s and women’s pay.” (Note that this might not be a reasonable measure; see “Gender equity should be measured by consumption, not income?”; Melinda Gates herself is a great example of a person whose income was negligible (went to $0 after marriage), but whose spending power is in the $billions (due to her sexual relationship with an older high-income man).)

Elizabeth Warren has been an advocate for increasing women’s pay relative to men’s (e.g., press release). She recently mocked men who don’t earn enough to attract a wife: “then just marry one woman … Assuming you can find one” (New York Times). If the typical woman in the U.S. earned more via wages than the typical man, Elizabeth Warren (or any other Democrat) would easily defeat Donald Trump.

Male Democrats are also passionate about increasing female wages to the point that marriage (and voting Republican) won’t make sense for them. Here’s a 2014 Obama Administration web page on the subject.

Readers: What do you think? Are efforts to boost wages by those who identify as “women” at least partly motivated by a desire to reduce the number of women who vote for Republicans?

(And, don’t forget that as long as this massive wage gap exists, a company can make crazy huge profits simply by hiring only women and thus having a big labor cost advantage over competitors with a mixed-gender workforce.)

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Are American interests harmed when the Syrian government governs Syria?

by philg

My Facebook feed is now 99 percent hysteria regarding the U.S. policy shift in Syria. Trump has decided to scale back involvement in the Syrian civil war, now in its 8th year. My friends who identify as Democrats are demanding continued U.S. military action (none has demanded a 600-ship Navy yet, but I remain hopeful!). Note that none of these folks are actually in the military or young enough to join, so they take no personal risk by advocating that others fight.

From a recent New York Times article:

The Syrian government had been almost entirely absent from the northeast since it withdrew or was chased out by armed rebels. The Syrian Democratic Forces, a Kurdish-led militia that worked with the United States to fight the Islamic State, soon became the region’s overarching political force.

If Syrian government forces can reach the Turkish border to the north and the Iraqi border to the east, it would be a major breakthrough in Mr. Assad’s quest to re-establish his control over the whole country.

In other words, while complaining that some Russians may have purchased a Facebook ad falsely asserting that Hillary Clinton was an elderly tax-and-spend Democrat, we have been supporting a group trying to carve off part of another country and run it for themselves.

(I recognize that Bashar al-Assad may have shortcomings as a leader, but he has a challenging task and it is unclear that the Syrian government is worse than a bunch of other governments worldwide. If it is legitimate for us to help an armed rebellion against Assad, shouldn’t we also be helping armed rebellions all around the world?)

Readers: Plainly it would be better if Syrians were more like the Costa Ricans and the Syrian government were more like the Costa Rican government. But, given that Syrians are not like the Costa Ricans, does it make sense to be continuously outraged that the Syrian government is not like the Costa Rican government? What are we buying with the money and American lives spent over the last eight years in Syria?

Is it enough to say “Because terrorism”? Why is it obvious that some government other than Assad’s would do a better job of discouraging Muslims in Syria from waging jihad? None of the September 11 jihadis were from Syria and, in fact, all came from countries whose governments we have supported.

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Drama on Martha’s Vineyard

by philg

Preparing a short talk for an upcoming aviation gathering…

My friend David landed his Bonanza at Martha’s Vineyard and the police were waiting for him. “Do you live in Katama in the gray house with the ‘I’m with Her’ lawn sign and the Black Lives Matter and Rainbow flags on the pole out front?” David affirmed that he did.

“We have some bad news for you, sir,” said the officer. “Your house burned down and your children are at the hospital being treated for smoke inhalation. They might have to bring in Boston MedFlight to take them to Children’s Hospital.”

“That’s terrible!” said David. “Do you know how the fire started?”

The police officers shuffled a bit and looked at each other. Finally, one spoke up. “I’m sorry to have to tell you, this, sir, but I think you know that Barack Obama recently bought a waterfront house in the neighborhood. It seems that he was having an affair with your wife. They were smoking in bed, the marijuana cigarette got tangled up in the covers and ultimately set the whole house on fire.”

David looks stunned and takes a deep breath. He puts his right hand on his heart and bows slightly.

“Barack Obama? Came to my house?”

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Why haven’t Democrats realized their own goals in Democrat-run states?

by philg

U.S. states are sovereign, have the authority to impose income, wealth, and consumption taxes, can borrow money, can make it illegal for employees to work for less than a threshold wage (and also illegal for an employer to pay more than a limit wage?), handle law enforcement and criminal justice for most issues, etc.

Why haven’t states run by Democrats achieved at least most of the social justice agenda that Democrats say they want?

Consider income inequality. California, for example, has a top income tax rate of 13.3 percent and a minimum wage of $12/hour. There is no reason the state income tax rate couldn’t be 30 percent with a minimum wage of $20/hour, right? (California Democrat and Presidential candidate Tom Steyer says that he wants a higher minimum wage that is a “living wage,” which would be roughly $50/hour in California to lift a family above the welfare eligibility thresholds.) That would narrow the spending power inequality (can be a measurement challenge) considerably, a goal that is related to the “income equality” goal that Democrats say is important to them.

(Same deal here in Massachusetts. Off-the-charts support for reducing income inequality and, simultaneously, among the highest levels of inequality in the U.S. Nobody in Washington, D.C. could prevent us from establishing a progressive income tax, raising wealth/property taxes, etc. and redistributing the money to poor residents. Yet we don’t do it, nor do we raise our minimum wage from $12 to $15 (or $20!)/hour.)

One objection to high tax rates is that people will move to avoid them. Yet Sweden was comfortable with this during its experiment with high tax rates back in the 1970s. If rich citizens moved to Monaco, the happy middle class Swedes said “good riddance.”

(Swedes experienced with multi-national business on our recent Northwest Passage cruise said that Sweden now has lower effective tax rates than the U.S. The nominal personal income tax rate in Sweden is comparable to Federal+California, but executive or entrepreneur Swedes are generally able to avoid this by turning what would have been ordinary income into capital gains.)

Democrats (e.g., Kamala Harris and Tom Steyer) say that they want a universal health care system. One third of Californians are already on Medicaid (“Medi-Cal”). Californians older than 65 should be on Medicare. Why not use the revenues from the above higher tax rates to automatically enroll everyone else on Medi-Cal and they can use it if they don’t have employer-provided insurance?

California Democrat Kamala Harris says that she wants free four-year public college (PBS). Why couldn’t California’s legislature vote to eliminate tuition at the University of California and Cal State?

Democrats say that they don’t want children to inherit wealth from parents. States have the power to impose estate taxes and a bunch do. Why wouldn’t the Democrats who control California change the state constitution to enable the collection of an estate tax?

California Democrats say that they would like less car-emitted pollution. They have the power to impose high annual registration fees on older high-pollution cars, highway tolls that are partially based on emissions output, and congestion fees to eliminate urban traffic jams. Yet they don’t do any of these things and instead blame the federal government for not letting them dictate emissions standards for new vehicles (which would do nothing to get a 20-year-old high-pollution car off the California roads).

Related:

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Which president has done the most to fight global warming?

by philg

A 5th grader here in Massachusetts relayed some information learned from a (unionized government-paid) teacher: Donald Trump is the worst president when it comes to accelerating global warming.

If we do want to worship presidents as modern-day gods on Earth, which president can be considered to have done the most to fight CO2 emissions and global warming?

How about Jimmy Carter? By presiding over a period of recession, he slowed down economic activity in the U.S. and therefore emissions.

Or Richard Nixon, whose “guns and butter” policies generated the inflation that led to the inflation and recession for which Jimmy Carter got blamed. Nixon created the Environmental Protection Agency, whose regulations have led to reduced emissions compared to the 1960s.

Barack Obama? He raised taxes and thereby slowed the economy.

(Separately, is it fair to say that Donald Trump has accelerated global warming? He has been trying to cut back on immigration from poor countries with low per-capita CO2 emissions. Every time someone from a poor country arrives in the U.S., worldwide CO2 emissions should go up. Wikipedia shows that U.S. emissions are roughly 17 tons per person. In Honduras, on the other hand, emissions are only 1 ton per person. Thus, if Donald Trump were to be successful in reducing migration from Honduras to the U.S., CO2 emissions would also be reduced.)

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Why do Democrats want to impeach Kavanaugh?

by philg

“Calls for Kavanaugh’s Impeachment Come Amid New Misconduct Allegations” (nytimes):

Several Democratic presidential candidates called for the impeachment of Justice Brett M. Kavanaugh on Sunday after The New York Times published new information about allegations of sexual misconduct against him, while Republican leaders condemned the reporting as irresponsible and defended him.

“These newest revelations are disturbing,” Senator Elizabeth Warren of Massachusetts wrote on Twitter about The Times essay. “Like the man who appointed him, Kavanaugh should be impeached.”

Kamala Harris, a Democratic senator from California and a member of the Senate committee that presided over his confirmation hearings, on Twitter echoed the call for impeachment.

I don’t understand what Democrats would gain if the two proposed impeachments were successful. Trump gets replaced by Pence, right? Wouldn’t that just set Pence up for a 9-year presidency? Similarly, if Kavanaugh were to be impeached, wouldn’t Trump (or Pence, in the Democrats’ ideal world!) simply appoint an equally conservative replacement? If the replacement happens to identify as a woman, e.g., Amy Coney Barrett, then the current standard playbook couldn’t be used.

(I personally would be happy if Kavanaugh were gone, since he has admitted to being “proud” of having practiced sex discrimination in hiring (nytimes: “I am proud that a majority of my law clerks have been women.”). I don’t understand how the U.S. can have a gender-neutral legal environment when judges brag about not treating all 52 (54?) genders equally.)

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